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. Last Updated: 07/27/2016

Kinder Surprise Awaits Chocolate Egg Market

Local confectioner Landrin plans to tap the Soviet Union’s cartoon legacy and release a home-grown version of Ferrero Rocher’s Kinder Surprise novelty chocolate eggs that come stuffed with toys.

In an agreement with the Soyuzmultfilm cartoon studios, Landrin will produce original chocolate eggs containing toy versions of the studios’ Vinny-Pukh (Winnie the Pooh), Pyatachok (Piglet) and other cartoon characters — giving the studios a greatly needed cash injection.

Ultimately, Landrin hopes to create its own cartoon characters, which can then be marketed separately. But success won’t come easy for the new kinder on the block — Ferrero’s original chocolate egg is known throughout the world and has been a childhood staple for an entire generation of Russians.

"Ferrero came up with the chocolate-egg-with-a-toy idea in 1970 and continues to lead the field in this area. We control 80 percent of the Russian market and are 100 percent recognizable with the public," said Marina Tatarskaya, deputy marketing director with the Dukalba company, official importers for the Ferrero group.

Despite Ferrero’s near monopoly, Olga Bogolyavlenskaya, a specialist with market research firm GFK, said Landrin’s business plan looked promising. "Ferrero created the demand for this product in Russia and subsequently occupied a large part of the market, making it harder for other companies to enter. Using Russian cartoon characters could be a success, however," she said.

Landrin owner Igor Markitantov said the sale price of its Petrushka egg will be about 15 percent less than that of a Kinder Surprise.

Under its five-year contract with Soyuzmultfilm, Landrin will be able to "produce characters from 100 cartoons" created in the studios and use cartoon clips in its advertisements. Markitantov wouldn’t reveal the value of the contract.

The Vinny-Pukh series will be launched under the Petrushka brand name in the fall and will comprise 36 collectable figures.

At present, Landrin’s chocolate eggs are made in Italy, while the toys are made in China. But the company is already building its own factory in St. Petersburg to begin production next year of up to 60 million chocolate eggs annually. A further $7 million is to be invested in the project.

He also plans to expand his work with the cartoon makers, including the production of a weekly serial. Landrin is to finance the project, which is expected to cost about $5,000 to $7,000 per minute.

"We had been planning the project with Soyuzmultfilm since 1998 until the crisis struck. We will begin with well-known characters, but we would like to create an entirely new product. Then we will start to act as investors and will be in a position to sell the right to use our characters," Markitantov said.

"The market must be studied to determine what kind of cartoons are worth making at the moment," said Akop Kirokosyan, commercial director with the Soyuzmultfilm company.

Before the 1998 financial crisis, about 300 million chocolate eggs with toys inside were sold in Russia each year. In 1999, the market shrank to 20 million, but is on the rise in 2000 and could reach 60 million to 70 million eggs, according to Landrin.

Landrin is part of the holding Kraftraise-Markitantov, which includes 15 companies. Before the crisis, Landrin had revenues of $120 million per year, but the post-crisis figure has shrunk by about 85 percent.